Wednesday, 22 January 2014

Published by Jimmy Simond on Wednesday, 22 January 2014 |&nbspNo comments

Do you know what the biggest benefit of paid search is? It is that you are able to create an AdWords account and you can easily start driving traffic today. But the fact is that setting up an account needs some time. Whether you’re an SEM manager or you’re a freelance or even a large agency, chances are high that you must have received some pushback from some client about how you would charge for your services. The most common question among the prospective SEM service providers is that how much should you charge your clients? If you too have the same question in mind, here are some pricing models that you may take into account.

A certain percentage of spend: Most often the large consumer-focused agencies utilize this pricing model as this can sometimes have the opposite effect of sticker shock. When a company or a brand spends millions of their dollars on paid search, charging at least 3-7% of spend can also help you generate enough amount of revenue. This amount of revenue has the capacity to cover the number of hours that are required to manage the campaign. While this pricing structure works mainly for campaigns that are large and entire consumer-focused, it may even work for campaigns that spend in the upper hundreds or thousands of dollars.

The Pay as you Go model: If you’re used to being transparent with your clients and they’re used to being open about fluctuating fees, you can even charge your fees on an as-needed basis, which is commonly used by the smaller agencies and the freelancers. This can easily open you up to have your work scrutinized but when you have a client who blindly trusts on you and is ready to pay for the work that you bill; this is perhaps the best option for you.

The Flat fee model: This is a fee model that guarantees to cover all the hours through which you properly manage the campaign. If you’re an established SEM manager or a firm and if you have your account launch and the entire management process down to a particular formula, you should be able to determine the exact amount of time that you may need to launch. You can then calculate the total hours by multiplying your hourly billing rate.

Pay for performance model: This is a model that makes the agency put some extra skin in the game. While spend can easily be covered by the client, there are some fees associated with the work that are based on the performance or the quality of the services. The agencies can also be paid a fee per conversion or they can even operate on a revenue sharing model.

Each of the pricing models mentioned above has their own pros and cons and each of them fits better in different sized agencies. But the bottomline is that you need to know which will suit your agency the best way. Understand what goes into a new account and choose a pricing model that is best for your needs.